CRISIS BEGETS REFORM: SERVING THE RETAIL MARKETS FOR ENERGY

How does energy retail market reform balance consumers’ needs, balance competition and regulation and maintain an investable market – all while meeting net zero?.

Institutional and regulatory arrangements in the energy market were adopted at a time before we had an ambitious net zero target, before we had big data and before we understood the significance of the part that customers and communities can play in balancing the market and optimising the use of the energy system.

The current crisis has brought huge hardship to consumers and has also markedly reduced competition as a regulatory tool. Ofgem has been forced into over 30 regulatory interventions to ensure or improve governance and licence compliance in the sector. And the investment case for retail energy is not clear.

We have to look again at market , arrangements. Whereas traditionally, the debate has focused on the wholesale (generation) market and on networks, now we should start reform at the customer end of the system – namely with the retail market and ways of making customers’ lives better. What should the regulatory model be? What is needed to procure the investment in systems and products to have a stable economic sector?

Going further, retailers may have to widen their offering from selling therms and kilowatts. Taking the net zero aspect, Simon Skillings summed it up in a Utility Week piece on electricity market reform, when he said

… reform must be driven to meet the evolving needs of consumers. Retail innovators should be constantly striving for new ways to provide comfort and convenience as cheaply as possible, and markets must adapt accordingly. Telling consumers that they must change to help the electricity system decarbonise is doomed to fail. The transition to a net zero electricity system must make lives better –this should be the focus of the electricity market reform process.

In the interest of not wasting a good crisis, we should address all the other compelling reasons for retail reform recent challenges moved well outside the range of scenarios for which the system was designed licencing and business models have proved inadequate to meet these challenges, and in common with other regulated sectors, there have been examples of poor corporate behaviour and questions of governance and regulation.

Our three speakers will lead a discussion that looks though the lens of consumers, regulators and investors.

Chair

Jonson Cox, Chair, Port of London Authority

›Jonson Cox has wide experience in infrastructure, energy and water. He is currently Chair of the Port of London Authority and a senior adviser to ISquared Capital. He serves as a non-executive director for two energy companies. He was Chair of water regulator Ofwat from 2012-2022.

Jonson has previously been Managing Director of Yorkshire Water and Group Chief Executive of Anglian Water, as well as chairman of UK Coal plc, Harworth plc and Cory Group.

Speaker

Jonathan Brearley, Chief Executive, Ofgem

›Jonathan Brearley was appointed as an executive member of GEMA in 2018 and this appointment runs until January 2025. Jonathan became Ofgem’s Chief Executive Officer on 3 February 2020. This follows his previous appointment as our Executive Director for Systems and Networks in April 2018.

He has wide-ranging energy sector experience, having led Electricity Market Reform as the Director for Energy Markets and Networks at DECC.

Prior to this, he was Director of the Office of Climate Change, a cross-government strategy unit focussed on climate change and energy issues, where he led the development of the Climate Change Act. Earlier in his career, Jonathan was a senior adviser in the Prime Minister’s Strategy Unit.

He holds a Bachelor’s degree in mathematics and physics from Glasgow University and a Master’s degree in economics from the University of Cambridge.

Speaker

Dame Clare Moriarty, Chief Executive, Citizens Advice

›Clare was appointed Chief Executive of Citizens Advice in April 2021. She leads the national charity and network of local Citizens Advice charities across England & Wales. Through 1:1 advice, online support and advocacy, Citizens Advice gives individuals the knowledge and confidence they need to find their way forward and speaks up on their behalf to bring about wider change.

Clare was previously a civil servant for nearly 35 years, latterly as Permanent Secretary of the Department for Environment, Food and Rural Affairs from 2015 to 2019, and of the Department for Exiting the EU until its closure in January 2020. Her early career was spent mainly in the Department of Health and the NHS, with senior roles in the Ministry of Justice and the Department for Transport. After leaving the Civil Service, Clare chaired the Health Foundation’s Covid-19 impact inquiry and worked with organisations including Transport for London and the Bank of England. She is a trustee of the History of Parliament Trust and chairs the South Downs Partnership. Clare was made a Dame Commander of the Order of the Bath in the 2020 Birthday Honours.

Speaker

Iain Smedley, Global Chairman of Banking, Barclays Bank

›Iain has over 25 years’ experience as a power and utilities banker.

Iain joined Barclays in 2010 and has worked on a variety of strategic advisory and financing transactions for power, utility and infrastructure clients in the UK and across Europe, including corporate and asset buy-side and sell-side M&A, joint ventures, dual-track M&A / IPO transactions and equity and debt financings.

Recent roles include advising National Grid on the acquisition of WPD, sale of NECO and sale of National Grid Gas; Pennon on its sale of Viridor and acquisition of Bristol Water; and Fortum on the stabilisation measures package for Uniper.

Prior to Barclays, Iain worked at Nomura (2009-10) and Morgan Stanley (1996-2008). Before becoming an investment banker, Iain worked as a consultant specialising in public sector restructuring, regulation and privatisation. He retains an interest in regulation and policy and was a member of the Advisory Panel for UK water regulator OFWAT’s 2019 price review process.

Iain graduated from Clare College, Cambridge with a BA in History and Economics, and is based in London.